These policy notes are intended asbackground for initial discussions between the newGovernment and the World Bank about the development strategyfor Turkey, and the possible support the World Bank couldbring to implement that strategy. This paper presents recentwork on specific sectors where action by the governmentwould be needed. The main points in each note are outlinedhere: Strict fiscal management is key to full realization ofthe twin objectives of low inflation and steady growth in asetting of a gradually diminishing public debt burden. Moreeffective government is the road to permanent macroeconomicstability and better delivery of public services underconditions of fiscal austerity. Fighting corruption isvital to ensuring that the government delivers effectiveservices. While extreme poverty (US$1 a day) remains verylow in Turkey, both urban food poverty and economicvulnerability are significant and have grown recently.Turkey has made unprecedented strides in the basic educationprogram launched in 1997. Now the twin challenges are toincrease gradually the share of GDP dedicated to educationwhile still accepting that not all improvements in educationcan be afforded at once. Turkey ranks far behind most middleincome countries in terms of health status. To meet theobjective of improving the health status of the population,fundamental and systemic changes will be required in theways that health care is financed, organized, and managed.Revitalizing the economy and further improvingcompetitiveness require continued attention to the financialsector. Business was badly affected by the 2001 crisis,and although now exhibiting signs of growth, requiresselective assistance to recover fully with the ability tocompete in the future. Small and medium-sized enterprises(SMEs) should drive the creation of productive employmentopportunities. Accelerating privatization is important forstrengthening the credibility of the reform program and forsupporting private sector development. Turkey is highlyvulnerable to natural disasters, especially earthquakes andfloods. Effective mitigation and preparedness cansignificantly reduce the risk of large economic and socialcosts. In recent decades, agriculture and other ruraleconomic activities have failed to live up to theirpotential as contributors to growth, rural employment, andrural welfare. Telecommunications can be an important driverof technological change and economic growth for Turkey.transformation of the electricity and gas sectors tocompetitive private energy markets aims to decrease costsand risks currently borne by the government by attractingprivate capital. Increasing the efficiency of Turkey'stransport sector will contribute to economic growth,environmental sustainability and poverty alleviation.Effective decentralization through greater empowerment ofmunicipalities is key to improving services. Reform of theadministration of justice will help ensure that justice isnot denied by being delayed. Bringing civil society intodevelopment decisions will lead to more effectiveimplementation of programs and meaningful results. A greateremphasis on transparency and participation must be combinedwith more readily available and consistent information.
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